BMI Says it Will Sue USA Over Licensing Rule

WASHINGTON (CN) - The Justice Department said Thursday it will not change the consent decrees that govern how the country's top music licensing groups operate, but offered a new interpretation of licensing rules, setting the stage for a battle in Federal Court.

The American Society of Composers, Authors and Publishers and Broadcast Music Inc., have been subject to consent decrees since 1941, an attempt by the government to push back against the licensing giants hurting competition by collectively licensing music performance rights.

But ASCAP and BMI now contend that the 75-year-old rules disadvantage songwriters and composers in the digital age.

They sought fractional licensing which would allow their members to pull out their digital licenses and negotiate their own deals with online streaming services.

Instead, the DOJ asserted a new interpretation that the decrees require so-called "full-work" licensing.

Full-work licenses give radio and television stations, bars, restaurants and online music services the right to play music for which ASCAP or BMI, groups known as Performance Rights Organizations (PROs), hold the rights "without risk of copyright infringement," Hesse said.

Under this type of license, if a song has multiple writers, each with their own shares of the song's rights, any of them can grant ASCAP or BMI the right to fully license the song.

"We believe that pursuing the requested modifications at this time would disrupt the status quo, would not be consistent with the purposes of the consent decrees and would not be in the interest of consumers," said Renata Hesse, acting assistant attorney general of the DOJ's Antitrust Division during a conference call Thursday morning.

Hesse said full-work licenses prevent music users from having to go through the hassle of identifying all of the rights holders of a particular song and negotiating with each of them individually.

"Again, based on the division's investigation, we see no reason why today's full-work licensing but fractional payments practice cannot continue into the future - with each songwriter continuing to be paid by the PRO with which he or she is affiliated," Hesse said. "In the unlikely event that a user obtains a license from only one PRO, that PRO would have reason to increase the rate for the license to account for the full share of all the songs it licenses rather than according to the shares on which the license fee is normally calculated."

ASCAP and BMI both opposed this interpretation, saying it could limit the freedom of authors to decide how they wish to be paid for their work and through which organization and could even disrupt the common practice of co-writing a song.

"The DOJ's position on BMI's consent decree means that, despite your decision to elect BMI as your PRO ... if you co-write any musical works, ASCAP could conceivably be able to license your share of your co-written creation, and pay you under their distribution system, not BMI's," BMI wrote in a question and answer article on its website. "It means that if you want to keep maximum control of your own creative work, you may soon consider limiting your pool of potential collaborators not to those with whom you work well, but rather, only to other BMI writers."

In a letter on the group's website, Paul Williams, president and chair of ASCAP, hit the DOJ for inaction on the consent decrees, as well as its position on full work licenses.

"ASCAP and BMI believe that the DOJ got this wrong and we will not rest in our mission to fix the problems the DOJ decided not to solve," Williams wrote.

BMI said Thursday that it plans to sue the department, while ASCAP announced it will work on new legislation in Congress.

But Hesse cast the DOJ's opinion as a positive for both the writers and those who want to play their music.

"Particularly for music users - such as bars and restaurants - that cannot meaningfully control in advance the music they play in public, this feature of the PROs' licenses benefits both the licensees as well as music creators in that it ensures that users can and will continue to play the creators' music," Hesse said.

Hesse said the issue of partial withdrawal, in which a music publisher partially withdraws its work from ASCAP or BMI in order to license it to services like Pandora or Spotify, spurred the DOJ to take a position on what licenses the consent decrees that govern the groups contemplate.

She downplayed the effect the DOJ's position would have on music licensing, saying users will still continue to get licenses from both ASCAP and BMI , giving them access to most songs they might want to play in public.

"Will there be some change? There will be some change," Hesse said. "Will there be some works that are not licensed that are licensable through ASCAP and BMI? I suspect there will be. But I do not think the number is likely to be a large percentage of the repertories of those PROs."

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